Lithium Energy Advances Solaroz Sale and Axon Graphite Spin-Out Amid ASX Suspension

Solaroz Sale Restructured and Unconditional

Lithium Energy Limited (ASX:LEL) has taken a significant step forward in divesting its flagship Solaroz Lithium Brine Project in Argentina. On 15 January 2025, shareholders approved an amended sale agreement with CNGR Advanced Materials Co. Ltd., making the transaction unconditional. The US$63 million deal, initially slated for completion by December 2024, will now be executed in two tranches: the first in April 2025 and the second in January 2026. This restructuring maintains the total purchase price while providing a phased transfer of ownership.

CNGR has already paid a non-refundable first deposit of US$1.8 million and a second deposit of US$6 million, underscoring their commitment. The amended agreement also includes up to US$15 million in funding from CNGR to support ongoing Solaroz operations until final completion.

Exploration Momentum and Environmental Approvals

In December 2024, Lithium Energy secured Environmental Impact Assessment (EIA) approvals for exploration activities at the Mario Angel and Payo concessions within Solaroz. These approvals pave the way for further drilling, hydrological studies, and metallurgical testing aimed at refining resource confidence and advancing project development. However, EIA approvals for the Central and Northern blocks, which host the bulk of the lithium resource, remain pending.

ASX Trading Suspension and Operational Transition

Following the sale agreement, the ASX suspended trading of Lithium Energy shares in October 2024, citing insufficient operational activity to justify continued quotation. The company anticipates the suspension will persist until it can demonstrate a sufficient level of operations or compliance with ASX Listing Rules, potentially through new acquisitions or the successful spin-out of Axon Graphite.

Axon Graphite Spin-Out and IPO Plans

Lithium Energy is preparing to spin out its graphite assets into Axon Graphite Limited, a newly formed entity combining its Burke and Corella Graphite Projects with NOVONIX's Mt Dromedary Graphite Project. The proposed IPO aims to raise between $15 million and $25 million, subject to shareholder approval at a general meeting scheduled for 7 February 2025. This spin-out is designed to create a vertically integrated battery anode material (BAM) producer, advancing from graphite mining to value-added processing.

The Axon Graphite board features experienced leadership from both Lithium Energy and NOVONIX, with plans to develop a BAM manufacturing facility in Queensland. The IPO proceeds will support feasibility studies and pilot plant development, positioning Axon Graphite as a significant player in the battery minerals sector.

Future Outlook and Strategic Focus

Post-Solaroz sale completion, Lithium Energy intends to leverage proceeds to explore new battery mineral opportunities, focusing on lithium, copper, cobalt, vanadium, manganese, and rare earth elements across Australia and the Americas. The company is also considering returning capital to shareholders, contingent on tax assessments and funding requirements.

Should the Axon Graphite IPO succeed, it may facilitate the reinstatement of Lithium Energy's shares on the ASX. Conversely, if the IPO falters, Lithium Energy may advance its graphite projects independently to meet operational thresholds for relisting.